<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 33-69996
COMMONWEALTH INCOME & GROWTH FUND I
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2735641
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1160 West Swedesford Road
Berwyn, Pennsylvania 19312
(Address, including zip code, of principal executive offices)
(610) 647-6800
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days:
YES [X] NO [ ]
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COMMONWEALTH INCOME & GROWTH FUND I
BALANCE SHEETS
<TABLE>
<CAPTION>
(AUDITED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 77,583 $ 217,288
Lease income receivable 320,019 212,624
Other receivables and deposits 23,200 2,009
Accounts receivable - General Partner 8,529 --
Computer equipment, at cost 6,870,510 9,551,365
Accumulated depreciation (5,976,772) (7,174,110)
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893,738 2,377,255
Equipment acquisition costs and deferred expenses,
net of accumulated amortization of $408,582 in
2000 and $370,770 in 1999 11,491 49,324
----------- -----------
Total Assets $ 1,334,560 $ 2,858,500
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 71,873 $ 54,037
Accounts payable - General Partner -- 35,018
Accounts payable - Commonwealth Capital Corp. 32,995 29,288
Accounts payable - affiliated limited partnerships 77,500 77,500
Unearned lease income -- 101,030
Other accrued expenses -- 25,000
Notes payable 108,698 716,792
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Total liabilities 291,066 1,038,665
Partners' capital:
General partner 1,000 1,000
Limited partner 1,042,494 1,818,835
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Total partners' capital 1,043,494 1,819,835
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Total Liabilities and partners' equity $ 1,334,560 $ 2,858,500
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</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME:
Lease $ 429,387 $ 764,031 $1,474,404 $2,377,448
Interest and other (4,910) 1,921 2,636 2,918
Gain on sale of computer equipment 110,879 110,071 123,323 336,179
---------- ---------- ---------- ----------
535,356 876,023 1,600,363 2,716,545
EXPENSES:
Operating, excluding depreciation 43,856 80,436 148,256 227,501
Equipment management fee - General Partner 14,748 34,368 73,720 116,864
Interest 3,396 22,008 20,699 89,897
Depreciation 342,738 502,458 1,222,626 1,878,648
Amortization of organization costs, equipment
acquisition costs and deferred expenses 9,856 34,362 37,824 111,942
Loss on sale of computer equipment -- -- -- --
---------- ---------- ---------- ----------
414,594 673,632 1,503,125 2,424,852
---------- ---------- ---------- ----------
Net income (loss) $ 120,762 $ 202,391 $ 97,238 $ 291,693
========== ========== ========== ==========
Net income (loss) per equivalent limited
partnership unit $ 0.19 $ 0.32 $ 0.15 $ 0.46
Weighted Average number of equivalent limited
partnership units outstanding during the period 631,358 631,358 631,358 631,358
========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME GROWTH FUND I
STATEMENT OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
PARTNER UNITS GENERAL LIMITED
GENERAL LIMITED PARTNER PARTNER TOTAL
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<S> <C> <C> <C> <C> <C>
Partners' capital - December 31, 1995 50 631,358 $ 1,000 $ 9,642,571 $ 9,643,571
Net income (loss) 12,755 (1,332,502) (1,319,747)
Distribution (12,755) (1,262,712) (1,275,467)
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Partners' capital - December 31, 1996 50 631,358 1,000 7,047,357 7,048,357
Net income (loss) 12,755 (918,878) (906,123)
Distribution (12,755) (1,262,712) 12,756,467)
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Partners' capital - December 31, 1997 50 631,358 1,000 4,865,767 4,866,767
Net income (loss) 12,755 (288,009) (275,254)
Distribution (12,755) (1,262,712) (1,275,467)
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Partners' capital - December 31, 1998 50 631,358 1,000 3,315,046 3,316,046
Net income (loss) 9,565 (546,733) (537,168)
Distribution (9,565) (949,478) (959,043)
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Partners' capital - December 31, 1999 50 631,358 1,000 1,818,835 1,819,835
Net Income (loss) 8,586 88,652 97,238
Distribution (8,586) (864,993) (873,579)
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Partners' capital - September 30, 2000 50 631,358 $ 1,000 $ 1,042,494 $ 1,043,494
==============================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 97,238 $ 291,693
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,260,459 1,989,000
(Gain) loss on sale of computer equipment (123,323) (336,179)
Other noncash activities included in
determination of net income (608,094) (1,030,744)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable -
General Partner (8,529) --
(Increase) decrease in lease income receivable (107,395) (85,928)
(Increase) decrease in other receivables (21,191) (970)
Increase (decrease) in accounts payable (7,164) (24,949)
Increase (decrease) in accounts payable to
Commonwealth Capital Corp. 3,707 --
Increase (decrease) in accounts payable -
General Partner (35,018) 66,966
Increase (decrease) in unearned lease income (101,030) (58,903)
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Net cash provided by operating activities 349,660 809,986
Investing activities:
Net proceeds from the sale of property 384,214 336,179
Equipment acquisition fees paid to General Partner -- 4,910
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Net cash provided by investing activities 384,214 341,089
Financing activities:
Distributions to partners - net cash used by financing
activities (873,579) (963,799)
Net increase (decrease) in cash and equivalents (139,705) 22,621
Cash and cash equivalents, begining of year 217,288 1,565
----------- -----------
Cash and cash equivalents, end of year $ 77,583 $ 24,186
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
BASIS OF PRESENTATION
The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. Financial information as
of December 31 has been derived from the audited financial statements of
Commonwealth Income & Growth Fund I (the "Partnership"), but does not include
all disclosures required by generally accepted accounting principles. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial information for
the periods indicated have been included. For further information regarding the
Partnership's accounting policies, refer to the financial statements and related
notes included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1999.
NET LOSS PER EQUIVALENT LIMITED PARTNERSHIP UNIT
The net loss per equivalent limited partnership unit is computed based upon net
income (loss) allocated to the limited partners and the weighted average number
of equivalent units outstanding during the period.
<PAGE>
Commonwealth Income & Growth Fund I
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of capital for the nine month period ended
September 30, 2000 and 1999 were cash from operations of $349,000 and $809,000,
respectively; and net proceeds from the sale of computer equipment of $384,000
and $110,000 for the nine month period ended September 30, 2000 and 1999. The
primary uses of cash for the nine month period ended September 30, 2000 were the
payment of preferred distributions to partners of $873,000.
Currently, rental income from the Partnership's leases are invested in money
market accounts investing directly in treasury obligations pending the
Partnership's use of such funds to purchase additional computer equipment, to
pay Partnership expenses or to make distributions to the Partners. At September
30, 2000, and December 31, 1999 the Partnership had approximately $77,000 and
$217,000, respectively, invested in these money market accounts.
The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of September 30, 2000, the Partnership had future minimum rentals on
noncancellable operating leases of $764,000 for the year ending December 31,
2000 and $368,000, thereafter. At September 30, 2000, the outstanding debt was
$108,000, with interest rates ranging from 6.4% to 8.5%, and will be payable
through September 2002. The Partnership intends to continue purchasing
additional computer equipment with existing cash, as well as when future cash
becomes available. In addition, the Partnership may incur additional debt in
purchasing computer equipment in the future.
The Partnership's cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12-month period. If available Cash Flow or Net
Disposition Proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may also reduce the
distributions to its Partners if it deems necessary. Since the Partnership's
leases are on a "triple-net" basis, no reserve for maintenance and repairs are
deemed necessary.
RESULTS OF OPERATIONS
For the quarter ended September 30, 2000, the Partnership recognized income of
$535,000 and expenses of $414,000, resulting in net income of $121,000. For the
quarter ended September 30, 1999, the Partnership recognized income of $876,000
and expenses of $673,000, resulting in net gain of $203,000.
Lease income decreased by 44% from $764,000 for the quarter ended September 30,
1999, to $429,000 for the quarter ended September 30, 2000. During the nine
months ended September 30, 2000, the Partnership did not expend any cash to
acquire new leases.
Interest income increased from $2,000 for the quarter ended September 30, 1999,
to $2,500 for the quarter ended September 30, 2000. In addition, the Partnership
recognized a gain on sale of computer equipment of $111,000 for the quarter
ended September 30, 2000.
The operating expenses, excluding depreciation, primarily consist of accounting,
legal and outside office services. The 45% decrease from approximately $80,000
for the quarter ended September 30, 1999, to $44,000 for the quarter ended
September 30, 2000, is attributable to the accrual of accounting fees.
<PAGE>
Commonwealth Income & Growth Fund I
The equipment management fee is equal to 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee was $15,000 and $34,000, respectively, for the quarters ended
September 30, 2000 and 1999.
Interest expense decreased 86% from approximately $22,000 for the quarter ended
September 30, 1999, to $3,000 for the quarter ended September 30, 2000.
Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of organizational costs, equipment acquisition fees,
and debt placement fees. These expenses increased by 34% from approximately
$537,000 for the quarter ended September 30, 1999, to $353,000 for the quarter
ended September 30, 2000.
For the nine month period ended September 30, 2000, the Partnership generated
cash flows from operating activities of $350,000, which includes a net gain of
$123,000, and depreciation and amortization expenses of $1,260,000. Other
noncash activities included in the determination of net income include direct
payments of lease income by lessees to banks of $608,000.
For the nine month period ended September 30, 1999, the Partnership generated
cash flows from operating activities of $810,000 which includes a net gain of
$336,000 and depreciation and amortization expenses of $2,000,000. Other noncash
activities included in the determination of net income includes direct payments
of lease income by lessees to banks of $1,030,744.
<PAGE>
PART II: OTHER INFORMATION
COMMONWEALTH INCOME & GROWTH FUND I
Item 1. LEGAL PROCEEDINGS.
Inapplicable
Item 2. CHANGES IN SECURITIES.
Inapplicable
Item 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
Inapplicable
Item 5. OTHER INFORMATION.
Inapplicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits: None
b) Report on Form 8-K: None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMONWEALTH INCOME & GROWTH FUND I
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. General Partner
November 13, 2000 By: /s/ George S. Springsteen
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Date George S. Springsteen
President
